Lengthy service with previous employer a factor in notice entitlement, but not simply added to short service with new employer
An Alberta oil and gas engineer is entitled to 10 months’ damages in lieu of notice for less than two years of employment after he was recruited from a long-term job with another company, the Alberta Court of Queen’s Bench has ruled.
The 49-year-old worker, worked as a senior exploitation engineer with Devon Canada Corporation, an oil and natural gas exploration company based in Oklahoma City in the U.S. with operations in Alberta. The worker was first hired in 1993 by a company later acquired by Devon Canada.
In early 2014, a recruiter for Northern Blizzard Resources, a Calgary-based crude oil production and development company, approached the worker. The job description indicated Northern Blizzard was looking for someone with the worker’s skills and at least 10 years of experience. Once the recruiter told Northern Blizzard management about the worker, they considered him their first choice.
Company gets its man
After several interviews, Northern Blizzard offered the worker a position as senior development engineer. The worker accepted the offer, giving up his deferred restricted share unit plan at Devon, which he estimated to be worth more than $185,000. He started work with Northern Blizzard on May 25, 2014.
The worker worked with Northern Blizzard for about two-and-one-half years until late 2016, when Northern Blizzard underwent a corporate reorganization. As a result of the reorganization, the worker’s employment was terminated on Dec. 5, 2016. Northern Blizzard provided the worker with a continuance of his base pay from Dec. 6 to Dec. 31 — 19 working days — plus two months of continued benefits.
The worker sued for wrongful dismissal damages and applied for summary judgment, suggesting there was no material factual issue for trial. He also argued that he was induced from secure employment with Devon Canada, and his total service with the two companies — 24 years — should be taken into account when calculating his damages. He also claimed his damages should include an annual bonus for 2016, which was based on corporate targets and individual performance for the year. Annual bonuses were paid in March to current employees for the previous calendar year, so he didn’t receive the 2016 bonus in March 2017 as he was no longer a current employee.
The court noted that the worker was aware at the time he was offered the position with Northern Blizzard that he would be giving up secure employment and his deferred restricted share unit plan and there was a risk, but it also pointed out that by using a recruiter and specifying the level of experience and skill required, Northern Blizzard intended to recruit someone who already had employment. When Northern Blizzard made the worker its first choice for the position, it knew he had 21 years of service with Devon Canada and its precursor, said the court.
The court found that the worker held a relatively senior position at Northern Blizzard and though he had no direct subordinates, he filled a “relatively niche position in the upstream exploration and development subset of the oil and gas industry.” His unique skills and experience is why Northern Blizzard hired the worker, said the court.
The court also found the nature of the worker’s work was stable, not project-based — as evidenced by his 21 years with Devon Canada in a similar position. It made sense that at the time of his hiring, both the worker and Northern Blizzard would expect stability and long service in the position.
The court determined that the worker’s lengthy service with Devon Canada should be taken into account because of the “mutual understanding” that it was a skilled, unique position requiring experience, but not to the point where his service with Devon should simply be added to his time with Northern Blizzard for calculating reasonable notice.
The court also felt that the worker was young enough at 48 that companies with similar positions available would consider him, especially with his skills and experience. As a result, it shouldn’t take him too long to find similar employment.
Worker entitled to bonus, but bonus was zero
The court determined that the worker was entitled to damages equal to 10 months’ notice. It also found that the worker was entitled to damages for the annual bonus for 2016, since Northern Blizzard’s breach of his employment contract cost him the opportunity to receive the bonus, which was paid out during the reasonable notice period.
The wrinkle in the bonus calculation, which Northern Blizzard argued, was that the company didn’t meet its targets in 2016 and therefore no bonus was awarded in March 2017. So, if the worker remained employed with Northern Blizzard and kept the opportunity to receive something from the bonus pool, he would have received nothing in the end anyway. The worker and other employees understood that the bonus was tied to company performance and changed every year, and the worker would have known 2016 wasn’t a good year and the bonus, if any, would be smaller. As a result, it wouldn’t be appropriate to award damages based on previous years’ bonuses, said the court.
The court found the worker should be compensated for 10 months’ salary and benefits, and no damages for the loss of an opportunity to earn a bonus that was zero anyway. It ordered counsel for the worker and Northern Blizzard to work out the details of the amount of damages, with the caveat that it would resolve the matter if they couldn’t.
For more information see:
• Toole v. Northern Blizzard Resources Inc., 2017 CarswellAlta 2692 (Alta. Q.B.).
